The present invention relates generally to a method for assessing real estate investments, and more particularly, to a rule-based decision process which formulates an investment strategy in terms of short term debt, long term debt, short term equity, and/or long term equity for a variety of property types and geographic markets.
There is a need for a consistent approach to assessing real estate markets that identifies areas of opportunity and, conversely, of caution. Often, market evaluations have been conducted on a deal-by-deal basis, and business decisions made this way can be the result of a tactical, rather than a strategic approach to investment analysis. Moreover, within any investment decision making process, is not uncommon for reasonable minds to differ on what factors contribute to the formulation of a successful investment strategy. For example, it is recognized that many believe that investment performance is attributed primarily to the broader market, i.e., the quality of investment decision primarily reflects the quality of the underlying market. Others may hold a different view. Such controversy during the investment strategy formulation process can be polarizing and differing opinions about the underlying investment market can lengthen the timing of the process and add complexity.
Thus, there is a need to reach consensus in advance of an investment deal transaction. Such preliminary consensus needs to be reached by having in place, a standard framework of decision rules and method of applying those decision rules that is agreed upon, in advance, by all parties proceeding through the investment decision process. The framework would be used to analyze the condition and expected trend of primary markets and property types. The steps of a process within the framework need to include the identification of regional and national trends and the systematic application of the pre-determined decision rules to the trends and associated demographic data, so that informed choices about where to focus marketing/sales effort can be made.